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MP Materials: Waiting On Major Market Catalysts To Fuel Fundamental Tailwinds

May 24, 2023 12:05 PM ETMP Materials Corp. (MP)LYSCF46 Comments
NorEast Invest profile picture
NorEast Invest


  • MP Materials has been a stock I have long been bullish on, however they have laggard since my first publication.
  • The Q1 Results were mixed and showed that there may be a weakness in the rare earth market moving forward.
  • Production is strong, and the future expansion plans look to bolster earnings.
  • Peers have recently been outperforming, which could become a bigger problem down the line.

Chassis of the electric car with powertrain and power connection,electric system of eco car concept.

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MP Materials (NYSE:MP) has continued to build out its rare earth supply chain with a 3 step plan to vertically integrate the rare earth mining at their Mountain Pass location. The end goal for

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NorEast Invest profile picture
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Comments (46)

In a broad sense, MP’s revenue and stock price will be determined by the Chinese and US governments. The Feds have an interest in having a profitable MP, but maybe not too profitable. The Chinese will manage the high end to inhibit more US-based rare earth investment.
Investor since ‘73 profile picture
How’s this for a catalyst? While the 2 metals now banned from being exported are not the metals being produced and now refined by MP, this is certainly very, very close to home.
@Investor since ‘73
I did some research, UMICY has those 2 metals.
I have been intrigued with MP since it de-SPAC'd, and have been in it a few times as well. CEO was on Mad Money tonight and made some interest and honest points: 1) MP is dealing with commodities and there will always be cyclicality but argues they have a solid balance sheet to weather through, 2) he speculates (and I agree) there will be increasing use cases well beyond EV which will be a tailwind, and 3) there is a very real re-/near-shoring push. China may legitimately be an issue. Part of me thinks (perhaps naively) after everything we have been through, our US government and US-based companies will be supportive of MP, which will lead to solid stock price appreciation. Having said all that, I am on the fence in getting involved. It could be a runner, but with the current macro and evaluations, I am not jumping into anything.
@HandsomeMaverick I agree with the 3 points. I hold a modest position in MP (slightly under water at this point) and believe that the patient investor will be rewarded. I also hold a smaller position in LYSDY.
If this company is a critical source of rare earth minerals, how can China take control of it without the US government stepping in?
Investor since ‘73 profile picture
@Rhoda711 The stock is for sale on the open market. It’s a publicly traded company, not a government agency.
@Investor since ‘73
I realize it’s for sale in the open market.
Open markets all over the world have allowed China to lock up critical basic materials that are vital to American interests.
The asleep at the wheel western governments have dropped the ball.
Investor since ‘73 profile picture
@Rhoda711 Gee, after color TVs, VCRs, microchips and nearly every other of our inventions, our government failing the people just now occurs to you? Welcome to the jungle, as they say. Our government isn’t run for our benefit, it’s run for the ruling class and their international corporations. Thanks to “Citizens” United, they’re citizens now and have every right to purchase their representatives with their unlimited, undisclosed money.
Investor since ‘73 profile picture
The price of neodymium, essential for use in EV motors has crashed. Let’s try some very simple logic to solve this mystery.

Has demand for EVs collapsed? Not even close, demand for EVs is skyrocketing, growing exponentially and every major manufacturer has plans to increase production by 4x or more within the next 2 years.

One nation, China has a near monopoly on the production of refined neodymium and MP represents their only serious competition from the US.

China can’t stop MP but it can buy it on the open market and oddly enough, as the price of neodymium has mysteriously collapsed, so has the price of MP shares from 60 to 20. Shocking, isn’t it?

China has a massive cyber operation that is run via it’s military and has virtually unlimited government funding.

So, to recap this unfathomable sequence of events and to keep it simple,…2+2=4, still and always.
@Investor since ‘73 MP can be pressured by China, who can easily control the material price through state sponsorship. This would be done to make MP expansion unattractive. Similarly, MP can be supported by the US and other governments to maintain a friendly source of a critical material. In other words, MP will operate between two government limits that will limit risk but also return.
Investor since ‘73 profile picture
@JohnsonTV The Chinese are buying MP, cheap. The last figure I know of is that they already owned 8% of the company and that was some time ago. I bet that they and their straw men entities now own at least 20%. When they have purchased enough shares, the price of MP shares will reflect them raising the price of neodymium. I won’t be selling my shares anywhere close to today’s levels. I do have a limit sell order in for a small % of my shares at 35. Not in any rush, I try to focus on 2 year horizons.
@Investor since ‘73 I’m not sure I follow the Chinese logic of dropping RE pricing so that MP shares can be bought cheaply; and then increase the RE price so they can make a profit on their shares. Do I have that right?

If so, the Chinese will own, say, 30% of MP or $1.1B in equity. If they choke off RE supply to run up MP shares to previous highs, 2.5X from today. The Chinese make a profit of $1.7B. I guess I don’t see this as a strong motivation in light of the total strategic importance of controlling the RE market.

I’m suggesting the Chinese are controlling the RE market as a way of limiting MP growth so as to maintain strong control over the material. This is the model behind the oil cartel. However, if they are buying up MP shares on the cheap to make a profit on a market they control, that seems like a good auxiliary outcome for them.
declanfromtrinidad profile picture
Waiting? By the time a major catalyst shows up….stock will already be 50% higher, than today.
NorEast Invest profile picture
@declanfromtrinidad What its gonna happen all at once? sure the stock could beat earnings but it still doesn't make it investable. No yield, previous bankruptcies as Mountain Pass, and inconsistent earnings. Sure I have overlooked that in the past hoping for a similar outcome but hype is dying and at this point its only worth what the next person is going to pay.
Investor since ‘73 profile picture
@NorEast Invest MP HAS beaten earnings expectations 10 quarters in a row.
NorEast Invest profile picture
@Investor since ‘73 Which is why I chose my words carefully. I never said they missed earnings I said they have Inconsistent earnings.

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